LOCKLAND - Lucille Amyx, standing in her driveway with the support of a walker for her healing broken leg, shook her head sadly as she talked about the struggles of this village where she has lived for all of her 85 years.

"There was a time when taxes were low and the upkeep was good," she said

"You would put up a house for sale here, and it would be sold within two or three days. That doesn't happen now."

The financial problems that caused the state to place Lockland on "fiscal watch" last week have been building for decades.

"We saw this coming," village administrator Evonne Kovach said.

"I think this is just a bump in the road. I'm confident we'll get through this all right."

Like a lot of American communities that were dependent on heavy manufacturing, this blue-collar town's once-thriving industrial base has been eroding for the past 30 years.

The village's revenues dwindled as businesses, large and small, moved out and state and federal funding shrank.

The loss of businesses also hurt Lockland Schools.

Voter approval of a 15-mill operating levy in August headed off the possibility of being absorbed into Cincinnati's public school system.

But Lockland village didn't fare as well with its operating levy this year, with voters resoundingly defeating an 8.5-mill operating levy in February.

Facing a $515,000 budget deficit, Lockland asked for help from the state.

After examining the village's financial records, the Ohio Auditor's Office has declared Lockland to be in a state of "fiscal watch."

That doesn't mean that state officials will control Lockland's finances or that the village will sustain penalties.

It's an early warning sign that Lockland's finances are approaching emergency status.

It means the village has a large enough deficit in its treasury and certain funds to receive free financial, technical and support services from the Ohio Auditor's Office.

"We can help them develop strategies and plans to improve their financial situation," said Joe Case, a spokesman for the auditor's office.

Lockland is the only Greater Cincinnati community of seven villages and cities in Ohio on fiscal watch, according to the auditor's office.

The Warren County villages of Corwin and Harveysburg are among nine communities listed in fiscal emergency, a more-serious status that requires stringent state oversight.

Since January, Lockland has whittled its deficit to $125,000 - mainly by laying off two police officers and not replacing five other employees who retired.

"It's a shame we've got into this situation," said Donnie Schilling, a 15-year Lockland resident who is running for one of two open village council seats this year.

"At one time, this was a booming town."

Lockland's early history was tied to the Miami-Erie Canal, which brought as many as 12 boats a day through town.

In fact, Lockland received its name from the four canal locks that created a large water supply and attracted businesses.

Interstate 75 now runs where the canal once did.

Lockland grew enough to become a city with a population of about 5,400 at its peak.

But then industries began leaving in the 1970s, and suburban shopping malls squeezed out many small businesses that had been staples of the village's business district.

Although the passage of the 15-mill levy this year saved Lockland Schools, it will take a big bite out of property owners' wallets.

Because of the levy, the owner of a $75,000 house pays $345 a year more.

"A lot of people here are retired and can't afford it," said Fred Combs, a 62-year-old resident.

"You'd be surprised at the number of people who have their houses up for sale."

But Mayor Jim Brown and Vice Mayor Debbie Bray said they haven't noticed any more for sale signs in front yards than usual, and they think the village will make a comeback.

Lockland is pinning a lot of its hopes on redeveloping eight abandoned industrial sites in the city.

These sites, called "brownfields," have quick access to I-75, which officials hope will help them lure new businesses.

"The turnaround is not going to happen overnight," Brown said.

"But we expect in the next two years to see a big improvement."

Meanwhile on the west side of Lockland, 20 new homes recently were built.

More new houses are expected in the north part of town.

Linda Amyx, who lives with her mother, Lucille, said Lockland's community pride will help pull it through these tough times.

"Lockland is a quaint, old-fashioned town which has a lot of nice people who love their community," said Amyx, 55, who recently retired after 30 years as a library aide with Lockland Schools.

"I would love to see Lockland make a comeback. It has so much potential."